Demand for gold surges 50% after Bank Rate cut

Transactions increased by 25% on the Royal Mint’s bullion website and there was a 50% weekly increase in sales of gold bars and coins.

A report from the world gold council, released yesterday, found that investment demand for gold hit a record high in the first half of 2016.

Hargreaves Lansdown says that gold has risen by 25% so far this year, from $1,060 to $1,330. In sterling terms it has risen by 45%, thanks to the weakening pound.

Laith Khalaf, Senior Analyst at Hargreaves Lansdown: commented: There has been a veritable gold rush this year, as global economic woes and loose monetary policy have attracted investors to the yellow metal in their droves, and it’s no surprise that the Bank of England’s interest rate cut has exacerbated this trend.

"Gold has benefited from the falling yield on other safe haven assets, in particular cash and bonds. The ongoing clatter of the printing presses in central banks across the UK, Japan and Europe also helps give gold a leg up, as it is a hedge against currency devaluation.

"Gold isn’t a one way bet however, indeed in 2011 it traded above $1,800 an ounce, and it now sits around 25% lower. Gold is an insurance policy against things going wrong, and as such it should make up only around 5-10% of a portfolio.

"It doesn’t solve the income conundrum either, because gold has no yield, though nowadays cash and gilts are pretty much in the same boat in that respect."